The Real Deal New York

Clockwise, from top left: Adam Neumann of WeWork; Walker tower at 212 West 19th Street in Chelsea; Park Laurel Condominiums at 15 West 63rd Street;, Time Warner Center at 10 Columbus Circle; an illustration of Compass’ Robert Reffkin; and Donald Trump

(Paydirt is a new weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick.)

Not many real estate startups can get Mayor Michael Bloomberg to announce their launch. And fewer still can convince some of the smartest venture capitalists in the country that they’re worth betting on, again and again.

Compass did both those things, making the lofty promise it would transform brokerage with tech. But as it seeks a $1.3 billion valuation, it’s worth scrutinizing the firm’s numbers: It claims, for one, that its agents generate over $6 billion in sales volume annually. But when The Real Deal dug into that figure, we found it included sales from before many of these agents had even joined Compass, making it a bit of a red herring.

That wasn’t the only fishy stat Compass has put forth. In a feature on the firm, reporters E.B. Solomont and Katherine Clarke explore other issues investors should be aware of. After it published, Leonard Steinberg, the president of the firm and its top broker, penned a lengthy rebuttal of some of its arguments, but notably stayed away from addressing the $6 billion figure.

I-sales helter-skelter in the summer swelter:Bob Knakal’s been in the game a long time. But not since his mullet-sporting days in the mid-90s has he been so confused about the market. “I hope we have more clarity by the end of the year,” he said, and added he was seeing a troubling trend: “Sellers who are not getting their price simply don’t transact.”

Brokers are certainly feeling the crunch. Not necessarily the machers sipping on Spicy ‘Ritas at Nick & Toni’s or hitting the links at the Atlantic, but the junior hustlers surviving from deal to deal, who were wooed into the business by the exuberance of the last two years. Expect to see a fair bit of churn if things don’t pick up soon.

Malaise: Jho Low, a plump party boy with a penchant for fancy real estate, is in trouble. The Malaysian scion and his cronies are being investigated in connection with a $3.5 billion scandal at Malaysian investment fund 1MDB. As part of the probe, the U.S. government moved last week to seize four pricey Manhattan condos as well as a large stake in Witkoff’s Park Lane Hotel.

Trump’s industry bump: One of Low’s former trophy acquisitions, a penthouse at 1 Central Park West, once belonged to another high-flying mogul with a larger-than-life presence: Donald Trump

It takes a fair bit of prodding (and perhaps a cocktail or three) to get some in the industry to admit their support for the Donald’s presidential campaign. Some of the heaviest hitters, however, aren’t worried about political correctness, and have been vocal in their pro-Trump views. And now, they’re finally backing their words up with real money.

Where the banks at?: In 2013 and 2014, banks were throwing cash at condo developers. It seemed like unless you were a convicted felon — and sometimes even then — you could get your buildings built. But concerns of oversupply coupled with a flurry of new regulations have put an end to all of that. Banks are retreating, coming to the conclusion that swiping right on certain projects just isn’t worth the risk. But where there is risk, there is opportunity: Stepping into the void are private equity funds, mortgage REITs, and other developers.

On the commercial front, things look a little brighter: Tishman Speyer announced it was moving ahead with a major Macy’s-anchored project in Long Island City. The developer scored financing from Bank of the Ozarks, which is quickly becoming one of New York’s most aggressive lenders.

WeWork’s woes: It’s been a rough fortnight for this $16 billion darling of venture capitalists everywhere. First, Bloomberg, citing a leaked internal document, reported it recently slashed its profit projections by nearly 80 percent. Although there’s been plenty of skepticism about the co-working giant, including in these pages, this was one of the first clear-cut signs that things inside the capitalistic kibbutz aren’t as rosy as promised. It had also had to deal with another data leak by a startup that claims its membership churn rate is rising.

WeWork, of course, didn’t take any of this lying down. It kicked the startup out of its network. It also moved to sue an ex-employee who it believes leaked the document, as well as a video in which CEO Adam Neumann declared an end to a weekly managerial indulgence of salmon, eggs, yogurt, and bagels. Talk about a schmear campaign!